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Friday, December 30, 2016

Not Quite There Yet

January 1st, 2017 was set to be the date that three other Valley stores raised the Desert Sky Games and Comics coat of arms on their flags and the clock started ticking on three additional locations to come. Alas, this will not happen quite yet, nor quite like that.

The expansion/merger is still underway, but we ran into a few wrinkles. Not all business deals unfold exactly as planned. As such, we're going to need a little more time to bring this to fruition. Stay tuned throughout Q1 2017 as we nail down the specifics and finally, ultimately, go live with the changeover in whatever its final form shall be.

Product Mix
As I wrote and wrote again right here on the Backstage Pass, I don't think comics are working for DSG right now, in particular at DSG Gilbert. However, we have a use case that they might still be meeting metrics at the Tempe location, which is currently doing business as Tempe Comics. While it is still likely that comics are entering a sunset cycle, I consider it a worthy effort to continue to serve that customer base while it is still feasible for us to do so. We're going to leave this door open for the time being, while the phase-out of comics in main stock at Gilbert gets underway (we've got all trade paperbacks at 50% off right now, for example).

False Start
One of the stores that was set to be absorbed into the new DSG was Tempe's Critical Threat Comics, right in the heart of the ASU campus. Jessica and Jeremy built a rich and vivid community at the "See-Tee-See," and unfortunately the passing of the baton amongst all involved simply didn't work out. CTC has closed, and DSG "Prime" did not quite have deep pockets to an extent that could have floated it home, though not for lack of interest in doing so. This is one of those things that will be chalked up in retrospect as missed opportunity due to timing. Had a bunch of things played out differently, there would have been a DSG behind the Chuck Box starting Sunday.

Schrodinger's Suite
DSG's lease option in Chandler doesn't extend forever, and part of the problem with losing CTC was that we had allocated resources to supercharge CTC's bottom line in advance of the handover, and when that didn't work out, we ended up neither having a comprehensive recoupment, nor a profit output. We needed one or the other under our calculus to ramp into a buildout for our west Chandler opportunity. This isn't off the table yet, it just got a lot more difficult. We're exploring a number of options for continuing this part of the expansion plan. It may miss its projected time-frame.

Springs Forward
The good news is that we are under no such constraints with our Superstition Springs Center location plan. They have quite a few vacancies, the rent they offered us is good, and the critical resource in that case is more of ownership attention than anything else. Our original announcement slotted East Mesa into the late spring or early summer of 2017 because we expected to be stuck in permit hell and/or construction prep for the Chandler location, and didn't want to find ourselves idle. Essentially once we've addressed other parts of the merger, we should be free to build this location. Still happening, we're just leaving it loose to move around the calendar as circumstances dictate. If some competitor beats us to the punch, oh well.

Highway 87 Beckons
We announced a moonshot for opening in Payson in early 2018, and we're just going to leave that plan the way it is for now. My folks live near Payson and I'm there pretty regularly. It will not be especially expensive or difficult for me to make that location happen, because travel won't present the same cost or logistical hassle to me that it would for a competitor having to do it as a remote project. Our primary limiting factor right now remains as it was a month ago: We don't currently have someone on deck to operate the place. Nobody is going to commute from the Valley to Rim Country. Someone's going to have to live there, either on a career opportunity or because they are already local to the area.

(A)bort (R)etry (F)ail
Business deals sometimes don't work out. While it would not be anyone's preference, it is possible that the expansion plan ends up terminating out, and the involved existing stores go on with the status quo ante. By comparison to some of the gargantuan business acquisitions and mergers you hear about in the news, our little project is tiny, a footnote, a rounding error. This experience has been a huge education to me in the sheer scope of massive business entity transactions.

So, that's a roundup of where the expansion is right now. DSG Tempe and DSG Ironwood each can exist, but how this is all going to unfold is still pending ongoing developments. So, again, stay tuned. The expansion/merger will not complete on time as expected on January 1st, but we are still moving forward with it.